DNA mismatch repair (MMR) stabilizes the cellular genome. Mice defective in the MMR gene PMS2 are susceptible to spontaneous thymic lymphoma and sarcomas. To determine the sensitivity of PMS2 knockout mice to environmental carcinogens and the protective effect of O6-methylguanine DNA methyltransferase (MGMT), heterozygous PMS2 knockout mice and human MGMT (hMGMT) transgenic mice were mated and the PMS2-/- and PMS2+/+ with or without hMGMT offspring were treated at 5 weeks of age with 50 mg/kg N-methyl-N-nitrosourea (MNU). MNU produces carcinogenic O6-methylguanine (O6-meG) adducts, resulting in thymic lymphoma in mice, which can be prevented in normal mice by overexpression of hMGMT. A significantly higher incidence of thymic lymphomas was observed in MNU-treated PMS2-/- mice, compared to wildtype PMS2+/+ mice (100 vs 52%; P < 0.001). The mean latency of lymphomas was also significantly shortened in PMS2-/- mice (81 vs 102 days, P < 0.01). Transgenic expression of hMGMT significantly but incompletely blocked MNU lymphomagenesis in PMS2-/- mice. The incidence of lymphomas in PMS2-/-/hMGMT+ mice was reduced to 80% (P < 0.01) and mean latency increased to 91 days (P < 0.05). Thymic lymphomagenesis was efficiently blocked in PMS2+/+/hMGMT+ mice with rapid repair of O6-meG. Since O6-meG:T mismatches in MMR+ cells may trigger mismatch repair resulting in abortive repair and cell death whereas in the absence of MMR, these mismatches are converted to A:T, we predicted that G to A point mutations in codon 12 of the K-ras gene would occur. In this study, we found G to A point mutations in codon 12 of the K-ras gene in many tumors. Thus, in MMR deficient tissues, methylating agents induce point mutations in cells with a higher rate of cell survival which together are potently carcinogenic in the thymus. These data suggest that PMS2 defective lymphomas may arise by the concerted action of environmental and perhaps endogenous methylation of DNA coupled to genomic instability.